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Canceled health insurance policies in Colorado create confusion

Nicole Butler, 40, of Colorado Springs hugs her son Richard II, 8, while preparing for a Halloween party. Even with a subsidy she rejects as taxpayer waste, she would pay more for a policy under Obamacare. (Hyoung Chang, The Denver Post)

The Affordable Care Act requires insurers to cancel individual policies — not those offered by major employers — if they don't meet new minimum benefits or cost-sharing rules, and many Coloradans now holding such policies are getting bewildering notices.

Small-business owners are getting similar letters for their group plans.

Some are angry at what they feel is a betrayal of President Obama's pledge that his health reforms would preserve existing coverage they liked.

"I don't want a government handout," said Nicole Butler of Colorado Springs, a canceled customer who, after complex research, found her family would qualify for a subsidy on the exchange. Even with a handout she rejects as taxpayer waste, her new policy would be more expensive than her old one.

"Keep the government out of my business," said Butler, who added that her family does not need maternity or abortion coverage. "Right now, I'm taking my premium money and setting it aside and paying in cash because my family is generally healthy. God has always come through for us."

Yet when other consumers learn about policies available on the new state insurance exchange, they find cheaper coverage with deeper benefits.

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"I am shocked," Melanie Miles said after using the state exchange calculator to find a new family policy for $760 a month.

Her canceled policy costs $900 a month. The deductibles on the exchange plan would be better, but her co-insurance share in the event of a big claim would be worse.

Members of Congress, who also must shop on the exchanges for their insurance next year, are hearing earfuls from confused or angry constituents.

"There's a lot of frustration because people can't find an equivalent plan," said Rep. Doug Lamborn, R-Colorado Springs. Lamborn said many people had bare-bones policies that worked for them, which are now barred by higher minimum-benefit goals of the Affordable Care Act.

"What that means is these are gold-plated, Cadillac-style plans that are very expensive," he said.

Rep. Diana DeGette, D-Denver, agrees there is confusion, and failings in the federal computer systems have compounded frustration. But the Colorado state exchange is working better, she said, and once people do the research, "most of them will be pleasantly surprised."

Advocates and insurance marketers, meanwhile, appear to be losing out on prime opportunities to educate the pubic and win enrollees. Anthem, for example, has sent many cancellation letters, but consumers say they are not clearly steered to similar Anthem policies on the state exchange.

Anthem would not say how many cancellations it has sent, but did show a sample letter offering information about the Connect for Health Colorado exchange.

Kaiser Permanente said it has sent cancellation letters to about 10,000 Coloradans on individual plans. The health-maintenance organization said it is reaching out to those customers about how they can find a similar Kaiser or other plan on the exchange.

Kaiser's statement said some consumers shopping on the exchange might find a lower-priced plan, while others who previously had a minimal, catastrophic-style plan might see an increase for the added benefits and for rating factors like age.

Consumers who choose not to buy insurance face fines that will rise in coming years.

The Colorado Division of Insurance said it had not yet compiled the total number of cancellation notices going out to state customers.

A few individual policies are "grandfathered" under Affordable Care Act rules, and customers can keep them. The grandfather clause is limited to those who still hold policies they bought before Obamacare was signed on March 23, 2010, and which have not changed "substantially" since then. Even before the new law, turnover was so high for individual policies and changes were so frequent that the grandfather clause affects only a few.

Supporters of Obamacare changes point out that private health insurance was hardly perfect before 2010. Companies unilaterally pulled out of individual policy sales if they couldn't make money, dropping tens of thousands of people in a state, or denied coverage to those already sick.

Consumers and small businesses seeking replacement policies must compare overall costs carefully on the exchange, brokers are warning. A monthly premium might look cheap, but deductibles are often high, and the co-insurance they will pay in the event of a big bill may be a jump from their old policy.

Miles, for example, had a policy that paid 80 percent of bills after she met her deductible. A potential new policy at a good price would pay only 70 percent. Miles acknowledges, though, that her family might have had difficulty maintaining a policy under pre-Obamacare rules because of some pre-existing conditions.

Her next step?

"We're going to have to shop. I don't want to have to pay a penalty and have zero insurance. I don't want to live in a state of risk. I'm frustrated," she said.

Miles said she plans to look more carefully at the fine print of the price she found this week.

"I was really hoping there would be a plan, and I believed what we were hearing that you could keep your old coverage."

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